Pentagon 'punts' on new pay commission

Nov. 13, 2013 - 10:26AM
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When Congress created a commission earlier this year to study military retirement and compensation amid increasing concerns that soaring personnel costs are threatening to overwhelm the defense budget, it looked like political momentum was building for a major overhaul that would help ease that looming budget crisis.

But the commission got off to a slow start when it began public hearings in early November, raising questions about whether its ultimate recommendation to Congress and the White House will be a catalyst for historic change — or just another report that gathers dust on a shelf.

One prominent expert warned the commission that tackling the hot-button issues of compensation in general and military retirement in particular will be a decidedly uphill battle.

“Discussion of retirement reform specifically has, I fear, poisoned the atmosphere,” said former Pentagon personnel chief David Chu, who testified before the commission Nov. 5.

Chu said even the troops who will never serve long enough to see a military retirement check — estimated to be more than 80 percent of the force — bristle at proposals for change.

“The troops, including the ... troops who will not collect, are worried that this is a sign that we are breaking faith with them,” Chu said. “It is a symbol of a lack of commitment to what they thought was promised by this institution they joined and which they are eager to serve.

“That is a very serious problem for crafting solutions in this domain.”

The politically sensitive nature of the commission’s task was also underscored by the Pentagon’s Nov. 1 decision to opt against submitting its own detailed opening recommendation for potential changes to its retirement and compensation system.

Congress ordered such a recommendation. Yet the Pentagon perfunctorily checked the box with a response containing no details or new ideas. The three-page letter delivered on the Nov. 1 deadline merely reiterated a few ideas floated earlier this year — limiting troops’ annual pay raises, increasing Tricare fees — but makes virtually no mention of military retirement.

“They punted,” concluded Mike Hayden, director of government relations for the Military Officers Association of America.

The letter signed by Deputy Defense Secretary Ash Carter frankly acknowledges that fact. “This letter has focused on military pay and benefits other than retirement,” he wrote. “Our staff also has expertise on military retirement. Although we have not made any specific retirement proposals, we would be glad to discuss our thoughts on the military retirement system informally with the Commission.”

Carter added that DoD will propose additional pay and benefits changes in February as part of DoD’s fiscal 2015 budget request to Congress. The compensation commission is required to finalize its work by May.

Opportunity lost?

Many military personnel experts were expecting the Pentagon to seize the opportunity to shape the early debate about pay reform and provide some fresh ideas.

“I was expecting a more detailed proposal ... at least giving some guidance to the commission as to what the military thought should be reformed. I think that was the intent of the law,” said Todd Harrison, a defense budget expert with the Center for Strategic and Budgetary Assessments. “It looks like they took a pass.”

That comes at a time when the automatic, mandatory budget cuts known as sequestration are fueling a new round of hand-wringing about personnel costs that senior leaders say could limit the military’s ability to train and modernize the force if those costs are not reduced. The commission was created to help build a consensus on the hot-button questions about the military compensation system, which has changed little over the past few decades.

Lawmakers and Pentagon officials suggested it could result in a proposal for sweeping change on the scope of the 2011 Defense Business Board’s suggestion to transform the military pension system into a 401(k)-style account, or the 2008 Quadrennial Review of Military Compensation’s suggestion that retirement checks should be delayed for all troops until a traditional retirement age near 60.

But Congress limited the commission’s influence from the start by declining to write the law in a way that would bring the commission’s final proposal before the entire Congress for a straight up or down vote. Instead, it will be subject to the traditional legislative gauntlet and could easily die a slow death at any number of points along the way.

Associations stand firm

As the commission got underway with its first round of public hearings, it was clear there remains staunch resistance to change from many military and veterans advocacy groups.

In testimony to the commission, the powerful service organizations, including the Association of the U.S. Army and the Association of the U.S. Navy, contested the basic premise that personnel costs are rising at a troubling rate, noting that military personnel costs have remained steady as a portion of the defense budget and military health care costs are no worse than comparable civilian systems.

Commission member Peter Chiarelli, a retired Army four-star, appeared frustrated.

“The problem is we are all throwing around numbers and we all think we’re right,” Chiarelli said. “I just wish we could agree on numbers because we just confuse the people below us.”

Chiarelli asked the advocacy group witnesses whether their organizations could support the Pentagon’s repeated request for raising Tricare fees on working-age military retirees under 65, explaining that he was “just looking for a place we could agree.”

The response from retired Army Lt. Gen. Guy Swan, vice president of AUSA: a blunt “no.”

In fact, retired Marine Corps Lt. Gen. Stephen Olmstead, testifying on behalf of the Marine Corps League, even suggested that the commission consider giving some substantial retirement benefits to troops who leave before serving 20 years — something that would likely further increase the costs of today’s benefits package.

Jim Herdt, vice chairman of AUSN and a retired master chief petty officer of the Navy, said the commission might want to consider limiting the scope of its mission.

“Is the system truly broken, or does it just need to be tweaked?” Herdt said.